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Negotiating with Home Sellers Is a Process

by Sharon Vornholt on September 17, 2012 · 4 comments

  
negotiating an old kitchen

I have found time and time again, that negotiating with sellers is more of a process than an event. Many times when we meet sellers at their house, they will just throw out an asking price that is nowhere in the ballpark. They tell us what “their expectations are”. And more often than not, they just pull this dollar amount out of thin air. If you ask them how they determined the asking price, they will just simply say “that’s what I decided I want for the house”. It then becomes our job to change the sellers’ expectations.

Go Ahead. Bring Up the “Bad Stuff”

You may as well just get it out into the open; the massive amount of work this house needs.

By this time, I have always asked the sellers not only on the phone interview but also at the property what repairs need to be done on the house. They will give you a list pretty quickly. My next question is always, “what repairs and upgrades would you do if you were going to live in the property?” At this point, they will give you a much longer list. It’s funny how the kitchen and bath didn’t need to be updated until they were going to live in the house. This is the perfect time to bring up just how much all of this work will cost.

It’s also a good remind them that they have the option to do all of these things themselves and then sell the house to a retail buyer. Let’s face it; they already know that. They don’t want to spend the money even if they have it, and they don’t want to do the work. Even though they understand what you are saying intellectually, in most cases their emotions have taken over.

Give Them Time to Process the Information

For some folks, this happens pretty quickly. With these sellers you can walk around the house for a while, and they will have already decided to accept your offer. At other times, we need to leave our offer with them and go back to the office. They may need to process what we have told them overnight or even for a couple of days. It’s not unusual to hear back from these sellers after a few days have passed. We all want to get as much as possible for our properties as we can, and these sellers are no different. When I leave a house without an accepted offer, I always let the seller know that I will be checking in with them in a few days. This leaves the door open to a further conversation about the property.

What to Do When the Answer is “No”

One thing you need to remember is that just because they aren’t a motivated seller today, that doesn’t mean they won’t become a motivated seller in the future. Circumstances change for everyone over time.

Leave these folks on your list, and continue to market to them. It’s also a good idea to pick up the phone periodically and check in with the seller. If they heard the same low offer from several real estate investors, chances are that one day they will finally be motivated to sell. There’s a really good chance that you will be the only one still following up with them.

Photo: Yew Tree House

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{ 4 comments… read them below or add one }

Dale Osborn September 17, 2012 at 10:08 am

Many times Sellers have such a high expectation for the sale of their property they may not be open to hearing “the bad stuff”. Their focus is to sell it at the highest possible price based on what they have heard other properties have sold for as well as their sentimental or emotional attachment to the property. You really need to be the local expert for the area to bring these sellers back down to earth. Motivation will be the key factor in whether the home sells or not. If not really motivated they will continue to ask for their price and if it does not sell they will take the sign down and wait. Communication as you mention is a key element. You need to keep in touch so that when their motivation to sell increases, your name is the one that pops into their head to contact.

Dale

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SHaron Vornholt September 17, 2012 at 1:02 pm

Hi Dale –

I have found that sellers USUALLY want too much for their property. Getting them to accept the value of their property in its current condition may take some time. But when they get motivated, things will change. Thanks for your comments.

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Rachel September 21, 2012 at 4:05 pm

Excellent write-up, Sharon!

I really like your statement that “negotiating with sellers is more of a process than an event” – this is so true. I think more people need to realize that when they are dealing with sellers. Most folks just want the quick turnarounds – seller calls, they see the home and put it under contract that day. Oh, if it were only that easy! :)

Sure, we hear about these overnight cases all the time (via forums, seminars, etc). But, how often does it happen? It’s rare. So for the rest of the time, yes folks need to come to the realization that negotiation is a process.

Apart from that, I think it’s also an emotional decision. Sellers will not work with people they do not like, know and trust. It’s just a fact of human nature. Many investors come in acting like vultures only focusing on the deal and the numbers with no regard for the seller’s situation and well being. Those who understand psychology and human nature tend to have more success than those who don’t.

Learning the game and practicing negotiating while building rapport does take time. Though, in the end the payoff can be very rewarding. Nicely done! :)

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Sharon Vornholt September 22, 2012 at 9:36 am

Hi Rachel!

I haven’t crossed paths with you in a while. I know that you certainly understand this process, and you take great pains to build relationships. And as you said, without that “know, like trust relationship”, you have very little chance of success.By the way, congrats on your book.

Sharon

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